TMI Blog2020 (5) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... atible with the above legal position. It may sound incongruous from an academic point of view but then that s what the law is. We hold that once an agent has been paid arm s length remuneration, and the income embedded in such remuneration has been taxed in India, no further profits can be taxed in the hands of the DAPE. Accordingly, the action of the authorities below, in bringing income of the DAPE- independent of the agency remuneration received by the agent of the assessee, is unsustainable in law. We, therefore, uphold the plea of the assessee and delete the impugned addition in the hands of the assessee. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- An unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the appellant was not entitled to the beneficial provisions of Article 9 (Shipping) of the Double Taxation Avoidance Agreement between India and the United Kingdom (India UK DTAA) since the appellant did not own or hire any ships and the income was not derived from the use or hire of the containers in international traffic. 2. Without prejudice to the foregoing ground, the Hon ble CIT(A) erred in confirming the action of the learned Assessing Officer in holding that the agent in India was a Dependent Agent of the appellant, constituting a permanent establishment (PE) within the meaning of Article 5 of India UK DTS, and the appellant was, therefore, liable to be taxed under Article 7 of India UK DTAA. 3. Without prejudice to the above grounds of appeal of the appellant, that it is entitled to the benefits of Article 9 of India UK DTAA, even assuming- though not conceding that the appellant has a PE in India as per Article 5 of India UK DTAA, the Hon ble CIT(A) erred in confirming the action of the learned AO in estimating the profits of the appellant, in accordance with rule 10 of the Income Tax Rules 1962, by relying upon section 44B of the Income Tax Act, 1961, thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a wholly academic issue inasmuch as once the agent is paid an arm's length remuneration for the services rendered, as is not even in dispute in the present case, no further profit can be attributed to the PE. In other words, the proposition was that, as the law stands now, existence of a DAPE is tax neutral except in a situation in which agent is not paid an arm's length remuneration for services rendered, and since it is nobody's case that agent has not been paid arm's remuneration, nothing turns on existence of PE because, even if there is a PE, no further profits can be attributed to the DAPE. None of the parties objected to this proposition, even though learned Departmental Representative dutifully relied upon the stand of the authorities below and submitted that the matter is in appeal before the Hon ble Supreme Court. Learned counsel for the assessee, however, has subsequently filed a written note justifying the claim of treaty protection under article 9 and dealing with other arguments which were not subject matter of consideration in the open court proceedings before us. In the case of Set Satellite (supra), Hon ble jurisdictional High Court has , after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material facts and circumstances are similar and the difference is only in respect of the income assessed- ₹ 40,82,990 in this year. In view of this agreed position, and respectfully following our decision in the ITA no, 2496/Mum/2009 above, we uphold the plea of the assessee that as the consideration paid to the agent was an arm s length remuneration and as the same has been subjected to tax in India, no further profits can be brought to tax in the hands of the assessee. The impugned addition of ₹ 40,82,990 is thus deleted. Learned representatives fairly agree that once this core issue is decided in favour of the assessee, all other grievances will be rendered academic. 11. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 15th January 2020, this order is being pronounced today on th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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